Suspension & Debarment

On July 31, 2018, the Interagency Suspension and Debarment Committee delivered its annual report to Congress on the status of the suspension and debarment system.  The report shows a continued high level of activity relative to the last decade and serves as a reminder that exclusion from the federal marketplace continues to be a risk for contractors that do not “cut square corners” with the government.

Decline in Suspensions May Indicate an Increase of Proactive Communication Between Contractors and Officials

The FY2017 report shows a modest decrease in the number of suspensions, proposed debarments, and debarments from the last fiscal year, a trend that has continued since the high-water mark set in FY2014.  But it also notes that the number of exclusions in FY2017, over 3,000, are almost double those reported when the Committee first began formally tracking the data in FY2009, approximately 1,800.

Continue Reading Slight Decrease in FY2017 Suspensions and Debarments, but Contractors Should Take Note of the Continued High Level of Activity

According to recent statistics, the numbers of suspension and debarment actions against companies and individuals has risen dramatically during the last few years. As cited in a recent article I authored for Law360, “[b]etween fiscal year 2009 and FY 2013, the number of suspensions government wide increased from 417 to 887, proposed debarments increased from 750 to 2,229, and debarments increased from 669 to 1,696. The most recent figures, included in a March 31, 2015, report issued by the Interagency Suspension and Debarment Committee, show that dramatic uptick has continued, with 1,009 suspensions, 2,241 proposed debarments, and 1,929 debarments in FY 2014.”

Although challenges to a suspension and debarment action are rare, three cases were filed within the first half of 2015 that may provide insight on this increasingly used administrative tool and ways contractors are contesting the claims.

The full article, “A Welcome Review of Suspension and Debarment Actions,” was published by Law360 on June 30 and is available online.

On May 18, the House of Representatives unanimously passed legislation (H.R. 1382) that would allow the Department of Veteran Affairs (VA) to give a “preference,” in awarding contracts for the procurement of goods and services, to offerors who employ veterans on a full-time basis.  The act was sponsored by Rep. Kathleen Rice (D-N.Y.) and is titled, the “Boosting Rates of American Veteran Employment Act” or the “BRAVE Act.”

Currently, the VA gives preference on contracts for veteran-owned small businesses but not businesses that actively employ veterans.  Under the BRAVE Act, the VA would have the power to provide and determine what preference a contractor is given based on the offeror’s percentage of employees that are veterans.  The Act, however, does not specify or define what sort of “preference” the VA could provide to contractors.  Furthermore, the Act would allow the imposition of penalties for any contractor who willfully misrepresents the veteran status of their employees in order to receive the preference.  The penalty for such misrepresentation would be debarment from contracting with the VA for at least five years.  There appears to be no limitation on what types of companies can receive this preference, encompassing large and small businesses alike.

The BRAVE Act was received in the Senate and referred to the Committee on Veterans’ Affairs on May 20.

Billions of dollars every year are spent in the United States on “Federal health care programs,”¹ including Medicare, Medicaid and Tricare, among others.² For individuals and entities in the healthcare industry, reimbursement from these programs is a vital component of their business. However, many are unfamiliar with the authorities under which the Department of Health and Human Services (“HHS”) excludes individuals and entities from participation in Federal health care programs, nor are they familiar with the nuances of the exclusion program. Understanding the types of violations that can trigger exclusion, as well as the process for responding to a proposed exclusion, is necessary for parties receiving reimbursement from Federal health care programs to ensure their compliance program is adequate and to understand the steps that must be taken to mitigate the impact of a proposed exclusion.

Introduction

Pursuant to sections §1128 and §1156 of the Social Security Act (the “Act”), HHS, specifically the Office of the Inspector General (“OIG”), has the authority to exclude individuals and entities from Federal health care programs. Exclusion means that items and services furnished, ordered or prescribed by the excluded individual or entity are not reimbursable under Medicare, Medicaid and all other Federal health care programs. While exclusion by HHS is similar in some respects to suspension and debarment, it does not bar excluded parties from being awarded federal contracts and grants. Once a party is excluded from participation they are added to the List of Excluded Individuals/Entities (“LEIE”) maintained by HHS and the exclusion appears on the System for Award Management (“SAM”). Any healthcare entity participating in Federal health care programs that hires or contracts with an individual or entity on the LEIE may be subject to civil monetary penalties, so it is important that they establish processes and procedures to routinely (monthly is recommended) check the LEIE to ensure new hires, current employees, and potential contractors or subcontractors are not excluded.

Continue Reading Exclusions by the Department of Health and Human Services – Authorities and Procedures

We are all familiar with the “revolving door” between the public and private sector – government employees will often leave their posts and cross over to the private sector to capitalize on their experience in the government. However, when government employees make that transition, it is imperative that they consider the federal conflict of interest laws, which may prohibit them from taking certain private sector positions and, at minimum, require them to be screened from particular types of work on a go forward basis. Failure to consider these laws could lead to severe consequences. A recent plea agreement highlights the importance of remaining mindful of these rules when negotiating post-government employment.

On Tuesday, March 11, 2015, former U.S. Air Force Captain Adam J. J. Pudenz pleaded guilty in Iowa federal court to violating restrictions on post-government employment and making a false statement to law enforcement agents. In 2010, Pudenz served as a U.S. military contracting officer in Afghanistan and worked on several U.S. government contracts related to the purchase of clothing and boots from an Afghan trading company. Pudenz admitted that before leaving his position as a contracting officer in Afghanistan, he negotiated future employment with the same Afghan company. Pudenz ultimately began working for the trading company and lobbied the U.S. government on matters related to the contracts he had previously managed.

Continue Reading Recent Plea Deal Highlights Importance of Post-Government Employment Conflicts of Interest

I recently co-authored an article with my former colleagues at Crowell & Moring, Angela Styles, Peter Eyre and Jason Crawford, reviewing how a notice of proposed debarment under the procurement regulations came to have the same impact as a suspension. In the article we suggest that agencies increase the use of show cause notices, and that consideration be given to amending the procurement regulations so that a notice of proposed debarment no longer triggers a government-wide exclusion.

The article, “How Proposed Debarment Became Equal to Suspension,” was published on February 2 on Law360.